Although you might have already heard of life insurance, today we want to introduce you to the wider world of protection, let you know about why you might need it and how it could help you and provide you with a better understanding of the different types of products available. This should help you to have a more informed discussion with your financial adviser.
Take some time to consider the things you spend money on. To make your first appointment with your financial adviser more productive, write down your monthly outgoings so you can share them in the meeting. Now consider what would happen if you were to become ill and were unable to work, got a serious illness, or if you sadly passed away. Unless you have substantial savings, it's likely that even with state benefits, you or your family would have to make significant cutbacks and would be unlikely to be able to keep the lifestyle you're accustomed to. You might already insure your pets, car or other belongings against unexpected costs. But protecting yourself and your family against the financial impacts of illness, injury or death should be equally important.
There are three main products that make up protection, and you can work with your adviser to find out the best mix of these for you, your budgets and what matters most to your family. The first type of protection we'll talk about is income protection. Your outgoings wouldn't stop if your income did. Income protection pays a proportion of your income each month If you're unable to work due to illness or injury. This will usually work around your sick pay arrangement with work. The most common claim for conditions are mental health, musculoskeletal problems and cancer. Income protection is designed to help you maintain your lifestyle while you're unable to work and allow you to focus on your recovery without the need to rush back to work.
There are several choices that you and your adviser can make together based on your needs. These could include how much you could receive each month as a benefit and how long you could receive payments if you make a successful claim.
The second type of protection we want to talk about is critical illness cover, which is designed to help support you and your family financially while you deal with your diagnosis and treatment so you can focus on your recovery without worrying about how the bills will be paid. Critical illness cover can be bought with life insurance or it can be taken out by itself. It pays out a lump sum if you meet one of the listed definitions which may pay on diagnosis when the condition gets to a specified severity or when undergoing named treatments or surgeries.
Some providers will allow you to adapt to your critical illness cover, which may include being able to add more conditions as additional cost. Many policies will also cover you for less serious conditions, paying out a set amount of money whilst letting you keep your cover in place. Each provider will have their own definitions that will need to be met for payments of a claim, and most will provide some cover for children too.
Finally, let's talk about life insurance. Life insurance is there to make sure that if you die, your family have a financial safety net to fall back on. Many people choose to take it out for the length of their mortgage, but others also consider when their children will be financially independent or when they plan on retiring.
You and your advisor will decide on the amount of money that you would want your family to receive if he passed away. If you don't die within the term, you won't receive the payout. A loss of life insurance policies will also cover terminal illnesses, which means that if you have a life expectancy of 12 months or less, you may be able to claim the benefit amounts before you die. When considering the type of protection you need, it is important that you consider how these three types of cover can work together to help protect you and your loved ones, whether it's due to you being unable to work, developing the critical illness or passing away.
Just as your life changes, your protection needs may, too, and your adviser can help you to consider this in your appointments.
If you want to know more about our life insurance services, contact us to get started.
Video produced by Aviva.